Why Smart People Often Do Foolish Things When Buying Software

By Sheldon Needle

Thirty Five percent off all software purchases are flops even when the buying decision is made by smart, successful biz people. Choose a manufacturing MRP system or ERP solution to run even a small job shop can be a daunting task if executives and/or owners lack the necessary experience.

Business brilliance does not translate into software buying expertise – Entrepreneurial and marketing skills have little to do with choosing the right software, a different skill set is required.

Don’t know what they don’t know – it takes a lot of expertise to evaluation and select manufacturing ERP software. Very few executives are aware of the details involved. They have so much confidence in themselves, they don’t bother thinking about what they might be not know.

Not aware of how important the software champion is -There is one essential ingredient in all successful installations. That is the Software Champion whose breath of operational, technical and political skills drives the success of the project.

Believing their authority is all that’s necessary to achieve a successful installation - Many executives are used to getting their way even if it’s only by dint of their power and intimidation. That won’t work with software. There are many ways staff can undermine a software installation if they choose to.

Buy based on myths - (e.g. no. of installations, buy the vendor who will be in biz in 5 years). Mr CEO or CFO thinks if he buys from the biggest richest vendor with the most installations, he can’t go wrong. But every company is a universe of one. What works for hundreds or even thousands of others may not necessarily work for him. Furthermore, today’s leading product can be tomorrow’s has been if the vendor decides not to make further improvements to it to save investment dollars.

Failure to prioritize - In choosing a manufacturing MRP software there can be many applications including: quoting, bills of material and inventory control, shop floor control, work orders, labor collection, CRM, financial applications, EDI, supply chain, shipping, packaging, service, multiplant and more). Some applications will always be more critical to company success than others and deserve to take precedence when evaluating prospective solutions.

Unqualified people are assigned to look for software solutions - We find that anything from summer interns to engineers and junior accountants are often charged with finding software solutions. But their credentials for the task are often slim and none. Frequently IT managers are assigned to lead software selection projects but know little about actual company operations or how to select application software which is an art quite different from running an IT department..

Believes references - Vendors will often use the same references over and over again. Any vendor can find a few customers who will vouch for them but they may have been on the system for years making their opinion largely irrelevant or even given financial incentives (e.g. free upgrades) by the vendor for being a reference.

Buying the salesman and not the software - It’s human nature to buy from someone you like and even trust, but buying the salesman is not going to assure you will be happy with the software.

Let vendors intimate them - (e.g. you cannot try out our software until you buy it) Would you buy a car without test driving it carefully. That’s about what vendors ask you to do. Just watch them and they’ll show you how good it is. Considering that software has hundreds of different functions, how can watching a handful of capabilities at a vendor -controlled demo assure you of anything?

Not understanding the uselessness of the 30 or 60 day guarantees - No one can evaluate software in 30 or even 60 days. With software of any complexity it can easily take up to year before you really understand how it works.

Not committing adequate resources to prepare the company for success in terms of search time, cleaning records, planning the implementation, etc. If you cannot afford to assign your best people and allow them adequate time to find and implement the software solution, your risk of failure will go up 10 times.

Skimping on training - For some inane reason companies often will plunk down a lot of money for software and then shoot themselves in the foot by skimping on training.

Not checking out the reseller carefully - Some vendors only sell through VARs, value added resellers (or could it be a value subtracted reseller?). A good reseller can make your installation fly, a bad one can virtually guarantee a failure. Their competence in your industry and quality customer support services are crucial to your success. No matter what they may promise you, your team is the one most responsible for the outcome.

Fix it now mentality and rushing to make a decision – Buyers of software often get weary of looking and just take the plunge before they are ready. Or they may be in a big hurry to get the presumed benefits (fix the current urgent problems) and not leave enough time or thought for proper planning.

Letting politics play the major role in selection, buying what the boss likes or heard about at the rotary club (hint: he’s probably least qualified to know)

Letting technology lead the way - By buying the latest and greatest technology (and the buzzwords that go with it) without paying enough attention to function, ease of use and staff ability to implement effectively.

Trying to reinvent the wheel - It can be very tempting to write your own custom system. Trying this in the Windows environment is very complicated and almost never works

Refusing to get outside help even when it’s called for (read consultant). Managers often outsmart themselves by refusing to get outside help when they need it. A competent, independent consultant is worth every penny. See it as a cheap insurance policy.

Setting arbitrary budgets - Sometimes the CEO will come up with an arbitrary ceiling of what he is willing to spend on software without taking into consideration Return on Investment or its ratio to total revenues. It could very be that that maximum is not nearly enough to get a system of sufficient capability to meet company needs.

Taking the advice of biased consultants - People who sell software and come in to do a free needs assessment are not going to give you unbiased advice. They are going to recommend the closest thing they sell that will meet you needs.

The final decision is always yours. be accountable, be alert, be flexible, and , above all, be humble.

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